Two former Parramatta Eels players are accused of harbouring semi-automatic weapons and possessing more than half-a-million dollars in cash after dramatic arrests in Sydney's Centennial Park yesterday.

Flugge 'not responsible for AWB collapse'

Former AWB chairman Trevor Flugge cannot be held responsible for the wheat exporter's collapse but must still be punished for failing to uncover the truth about its secret kickbacks to Iraq, a judge says.

Mr Flugge has been fined $50,000 and banned for five years from managing companies - the longest disqualification imposed over the scandal - after a judge found he could have unearthed the truth and stopped AWB's $US223 million in sham payments to Saddam Hussein's regime.

Mr Flugge was not alone in failing to make inquiries or carry out his duties but was left almost alone during the Australian Securities and Investments Commission's decade-long legal action, the Victorian Supreme Court judge said.

"It is relevant that Mr Flugge has been left to face the accusations of ASIC almost alone, when many other AWB executives have avoided being proceeded against," Justice Ross Robson said on Monday.

"The Australian community, however, has every right to be profoundly disappointed in AWB's conduct and the ignominy that it has brought on Australia, and the damage suffered by its shareholders.

"Nevertheless, the court should be circumspect in not adding on to Mr Flugge the sins of others within AWB who have escaped being penalised."

ASIC had argued Mr Flugge's failure to make inquiries and therefore stop the improper payments of inland transportation fees to the Iraq Grain Board led to the Cole royal commission, the loss of the single desk and AWB's collapse.

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But Justice Robson said the main contribution to the harm was the actions of AWB management in not properly ensuring that the United Nations had knowingly approved the payment of the inland transportation fees to the Iraqi Grain Board.

"All that can be concluded is that if Mr Flugge had made proper inquiries, it is likely that some of the damage that followed may have been mitigated and the payments would have stopped sooner," he said.

"In the circumstances, Mr Flugge cannot be held responsible, to the extent suggested by ASIC, as even if Mr Flugge had stopped the payments after the Washington meeting, there is every likelihood that ASIC would have taken proceedings against AWB executives; the single desk may still have been lost; Australia's reputation internationally would have been tarnished; shareholder class actions may have been instituted; and AWB may have collapsed."

Mr Flugge was cleared of knowing about the kickbacks but the judge found he should have made inquiries after being told, at a Washington meeting in 2000, that the UN was looking into whether AWB was making improper payments to Iraq.

Justice Robson said Mr Flugge had made a significant contribution to society and the 70-year-old did not act dishonestly, but the breach of his duty as a director was serious.

Mr Flugge, who is reviewing the judgment, said the serious allegations had been hanging over him for more than a decade since the Cole inquiry.

"The court entirely accepted that I acted honestly and had no knowledge of any wrongdoing," he said in a statement.

Mr Flugge had hoped to avoid any penalty while ASIC wanted a 10-year ban and the maximum $200,000 fine.

ASIC commissioner John Price said the case showed company directors and senior management have a positive duty to chase down misconduct allegations.

"It also demonstrates that if necessary, ASIC will pursue difficult, complex cases over a lengthy period of time to bring poor corporate conduct to account," he said.